Julius Bär's Struggles Unveiled
A Peek Behind the Curtains of the Swiss Bank
Get back to fundamental operations and primary functions
By Thomas List
Swiss private bank Julius Bär has been in the spotlight lately for the wrong reasons. The institution's financial woes are a hard pill to swallow, with a hefty 606 million Swiss francs lost from the failed investment in real estate bankruptcy case of René Benko. To add salt to the wound, another 130 million Swiss francs in value adjustments were tacked on this year due to a flopped real estate project in Hannover.
The Bank's Troublesome History
Julius Bär, one of Switzerland's heavyweights in private banking, has been grappling with troublesome real estate projects—particularly in Germany—and issues with its legacy private debt portfolio. The bank disclosed a CHF 130 million loan-loss charge in the first quarter of 2025, primarily linked to two failing German real estate projects. One of these was a property project in Hannover under forced administration, while the other was a development teetering on the brink of default, and both were part of the bank's disbanded private debt desk.
The private debt desk's past is riddled with connections to the downfall of René Benko's Signa Group in 2023. Since then, Julius Bär has incurred write-downs surpassing CHF 700 million from this business line.
Bank's Response and Strategic Changes
In response to these setbacks, the bank is aggressively winding down its private debt book. The exposure has decreased from CHF 0.8 billion in late 2023 to below CHF 0.2 billion by early 2025, accounting for just 0.4% of its total loan book. Moreover, in an effort to address risk management and governance failures, the bank has ousted its Chief Risk Officer and streamlined its executive board.
Broader Financial and Operational Impact
The bank's Assets Under Management (AUM) took a hit, dropping by 6% to CHF 467 billion. This downward trend was caused by currency headwinds, market volatility, and the fallout from these floundering projects. The adjusted cost-to-income ratio rose to 72%, above the target of 64% for 2026, signaling high pressure on efficiency despite some restructuring progress. Despite these setbacks, Julius Bär reported solid net new money inflows and expanding gross margins for the first four months of 2025.
So, Julius Bär's recent financial issues stem from substantial loan losses on German real estate projects and a legacy private debt portfolio tied to high-profile collapses. In an attempt to right the ship, the bank is aggressively de-risking, exiting the troubled private debt business, and revamping its risk management structure.
Despite Julius Bär's struggles, the bank continues to invest in real-estate projects, with recent losses amounting to CHF 130 million due to two failing German real estate projects. The bank's history of real-estate investments, particularly in Germany, has been problematic, leading to significant write-downs. In an effort to mitigate risks, the bank is now focusing on exiting its private debt business in real-estate finance.
